At different times throughout our lives, we can all find ourselves living on a budget. It could be that you’ve recently bought a home and you need to keep the cost of living down for a while. It could be that you or your partner has fallen on hard times due to a period of unemployment. Whatever the reason behind your reduced disposable income, your desire to save money may still be strong. Planning for potentially even harder times ahead is a smart move if it can be achieved - visit Wealthify for investment ISA savings options.
But how can we save money on a budget? Is there a way to ensure that our hard-earned savings remain largely unaffected by our reduced income? Or do we necessarily have to spend our savings and start again? All good questions. Let’s get into it.
First, we count everything!
Before we can decide our savings goals, we have to know what our incomings and outgoings look like. Self-auditing our spending is a bit like admitting how much junk food we’ve eaten recently - everybody wants to bend the truth but ultimately facts are facts.
Write down what money you have coming in. Write down your bills. Can you cover your bills? If not, saving money may not be an option. But if you can pay your various monthly direct debits, saving on a budget is likely possible.
Cancel all non-essential outgoings
If you’re a member of a gym and you enjoy using a music streaming service while at the gym, think of those two things as easy savings. Cancel them both and instantly save on your memberships each month.
Perhaps you pay for multiple TV streaming services. That can all stop, too. And what about other subscriptions to magazines or indoor climbing centres (or maybe you pay extra each month for additional phone data that you never use). Cut it all out and get by without it for easy profits that can pepper your savings account.
Plan your meals
As a challenge, see how much money you could live on per day. You’ll need to average this over one week because things like cereal and pasta represent better value for money when you buy in bulk.
Set yourself the task of eating less of your income by completing a challenge that sees you cut your weekly food budget in half. Once you start realising where corners can be cut with food, further reductions can be made, saving you more money. That first week will be the hardest.
Automate your savings
Perhaps the biggest mistake people make when trying to save on a budget is failing to move money from their account into a savings account. They think it’ll be OK to just leave the money sitting there. But the temptation to spend it will be strong. Automate your savings and eliminate the possibility of weaker moments that could see you using your everyday account to pay for expensive meals and other luxury items as a treat.